Mortgage lending decreased in 2019

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Mortgage lending decreased in 2019

Frank Conway

Mortgage lending declined in 2019 compared to the previous year. In total, 34,087 mortgages to first time buyers, second-time buyers and investors were drawn down compared to 35,223 in 2018. This represents a decline of 3.2%.

The level of mortgage lending was on par with 1991 levels where 33,720 mortgages were drawn down. To put this into perspective, in 1991, about 1.3 million fewer people lived in Ireland compared to now.

Comparing apples-to-apples

Mortgage lending in Ireland falls into five categories; first time buyers, second-time buyers, investors, switchers and top-ups. Since mortgage records began in 1970, lending activity in the three main categories have been tracked consistently so it is those that are used for this analysis.

First-time buyers dominate

Across the entire mortgage market, first time buyers make up over half of those borrowing but across the three main categories (first-time buyers, second-time buyers and investors), they make up more than six-in-ten (63%) of all mortgages taken out.

Buy-to-let lending all but extinct

Lending for buy-to-let or investment property purchases fell in 2019 compared to the previous year. In 2019, a total of 1,252 loans were drawn down compared to 1,494 in 2018. Incidentally, at the height of the mortgage market in 2006, 28,141 buy-to-let mortgages were drawn down. The 2019 figures represent a fall of over 95% from the 2006 peak.

Year-by-year breakdown

This was the first year since 2016 that mortgage lending activity recorded a decline:

YEAR LOANS (Units)
2013 13,472
2014 20,155
2015 23,964 (new micro prudential mortgage rules introduced)
2016 23,032 (first full year under micro-prudential rules)
2017 29,425
2018 35,223
2019 34,087

Brexit factor

It is likely that Brexit uncertainty contributed to some first time buyers holding off on making a purchase. Reports of falling house prices in some parts of Dublin and surrounding areas are both a cause and impact of price and economic uncertainty caused by Brexit. Additionally, limited supply of property in some highly sought-after locations in the greater Dublin areas (including surrounding counties) will also have played a role in the fall in draw-downs.

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